New environmental law could create liability for banks and real estate investors
All bankers and real estate investors know that one of the primary reasons for requiring Phase I, environmental reports was to satisfy the law relating to the EPA liability. The law says that a property owner, or a person responsible or in control of a property (bank lender) can qualify for the "INNOCENT LANDLORD'S DEFENSE" if they have an independent environmental report in file. Recently, the law, has changed and now a new environmental protocol must be followed to qualify for the exemption of liability.
State and National Banks are especially vulnerable, due to portfolios of real estate loans, and every bank should be dilligent in full compliance, especially as environmental issues become more pronounced. Essentially, the law said that if a bank, institution, or individual, gained control of a piece of property and it was found to have environmental problems they could be liable for the clean up and remediation, as well as damages to any humans, unless they showed due dilligence and got an environmental report. That then would give them an "innocent landlord" defense.
Recently the EPA and government agencies changed the law expanding the requirements and scope of environmental reports, so that unless an environmental report included an ALL APPROPRIATE INQUIRY format and additional documentation, that the law would not offer any waiver of environmental liability. Therefore, we have had customers ranging from California, Arizona, Nevada, New Mexico, North Carolina, and Texas to call us asking us to do updated or new environmental reports that include the current AAI protocol, so that the properties they own (or in the bank case, have as collateral) qualifies for liability waivers. Most environmental companies have not yet adopted the new protocol, but our firm has. (817 738 9595)
Our firm has been told by environmental authorities, and we agree, that every land investor and lender should require a new environmental report with curren protocols for legal liability protection. We understand that the EPA, is working with the ASTM Standards group to require that ASTM also expand their protocol.
Our firm has adopted the AAI protocol and we are glad to update your old environmental reports. Federal Examiners have told some banks that any real estate loan (including residential) of over $100,000.00 (or at a prudent level that could impact bank profits) should have as a minimum, an outside, independent, Phase I environmental report. This could be an important liability factor for banks and landowners, as the practice of state and government agencies, putting "environmental liens" on properties is becoming more widespread.
At the very least bank lenders or large real estate investors should do a compliance audit of real estate files, and if you have real estate files, of size that do not have an environmental report that states it complies with AAI protocols, you should have theses reports updated and put in file. Otherwise, you, your company or your bank has no legal protection in environmental matters under current law.
If you don't have the time or staff to check your real estate files for environmental compliance, our firm will be glad to come into your business or bank, and do an independent real estate portfolio, environmental compliance audit, and give you a written report as to what we find. If we do these in "bulk" for your bank, we can assure that your bank is in compliance, and will also offer bulk rate discounts. We can complete these quickly and at reasonable cost, to save your bank, or real estate customers, future environmental liablity.